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Apple investors could see cash coming their way

(1:57)

WSJ's Telis Demos has details of a novel plan from billionaire hedge-fund manager David Einhorn that could create a windfall of cash for Apple investors.

$AAPL: Apple
AAPL, -0.87%
shares sank further into negative territory, trading down more than 2%, after Chief Executive Tim Cook told the audience at an investment conference that the company will not wage a campaign over a proposition to eliminate its ability to issue preferred stock. The proposition is the target of a lawsuit filed by hedge-fund manager David Einhorn of Greenlight Capital. Cook called the lawsuit “a silly sideshow,” but promised to evaluate Einhorn’s position. Cook: Apple is not a hardware company

Investors’ disappointment notwithstanding, analysts at Piper Jaffray believe that Apple will raise its dividend when it reports results for the March quarter, which is in line with the Street’s expectations.

“We note that in the last two quarters, Apple averaged a 25% payout ratio. Based on our estimates, in order to sustain this ratio, Apple would have to increase its dividend in F2014,” said Glen Yeung at Citigroup. “We add that to achieve a 3% dividend yield, Apple need only increase its total dividend payout by [around] $3.6 billion, a modest amount when considering its $43.1 billion domestic cash balance and our modeled $42 billion free cash flow estimate for 2013.”

Meanwhile, the Wall Street Journal reported that the percentage of fund managers with more than 5% of their portfolios weighted in Apple fell to 65% at the end of 2012 from 77% at the end of the third quarter. WSJ: Fund managers pare Apple holdings

@outlawz616: I guess Tim Cook and David Einhorn aren’t going out for beers anytime soon $AAPL

@contingencyisu: Apple CEO Tim Cook says his company is “conservative financially”...I guess that’s how to describe a company holding $137B in cash $AAPL

Gainers

Assurant Inc.
AIZ, -0.73%
shares climbed 6.2%. The mortgage and property insurer is getting a boost after the Federal Housing Finance Agency rejected an attempt by Fannie Mae
FNMA, -4.28%
to lower the cost of insurance for homeowners who are behind on their payments. The FHFA is not convinced that Fannie Mae’s plan would help to reduce costs, The Wall Street Journal reported. WSJ: Fannie Mae rebuffed on insurance

Housing-related stocks were among the top gainers with Masco Corp.
MAS, -0.04%
advancing 12%. Late Monday, the building products company reported fourth-quarter earnings of 4 cents a share, better than the break-even forecast by analysts in a FactSet survey.

StemCells Inc.
STEM, +1.28%
shares gained more than 19% as the company said its first patient cohort in a clinical trial of purified human neural stem cells to treat chronic spinal cord injury demonstrated a “favorable safety profile.”

Decliners

Dun & Bradstreet Corp.
DNB, -0.39%
shares slid 7.9%, the biggest decliner on the S&P 500. On Monday, the company reported fourth-quarter earnings of $2.38 a share which fell short of the $2.46 a share forecast by analysts in a FactSet poll.

Shares of MELA Sciences Inc.
MELA, +0.00%
fell 13%. The medical-device company said Tuesday it priced its offering of 6.1 million common shares at $1.30 a share to raise about $7.3 million.

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